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The real estate market during the pandemic

Investing

July 28, 2020

Real estate continues to be one of the safest investments you can make.

However, given the current situation, you've probably wondered if the COVID-19 pandemic has affected the real estate market, and how to invest to get the most benefit.

Good news: the outlook for this sector is quite promising, your money continues to be safe and provide you with several opportunities.

That's why in this short post you can read everything you need to know to succeed in the Mexican real estate market after the pandemic.

The Impact of COVID-19 on the Real Estate Market

The year 2020 is a challenge for the world, as we live through the COVID-19 pandemic which caused a worldwide medical emergency and paused different sectors, changed our way of working, studying and general lifestyle.

But how has COVID-19 affected the real estate market? To begin with, unlike other sectors, it was not drastically affected.

In fact, in Mexico many of the areas with high capital gains maintained their level of profitability, and that is why several investors showed interest at all times.

And why is this? Because of the confidence and peace of mind that this market offers you, as properties maintain or increase in value over time, even in times of crisis.

Graph that shows the purchase interest of real estate.
From April to July there was a considerable increase in the purchase of houses, and a slightly lower one in the purchase of apartments, land and industrial properties. (Graph based on Lamudi's data)

Nevertheless, it is true that the COVID-19 pandemic affected certain parts of the sector. A clear example is the sale and rental of office space and construction, activities that had to be stopped because of the pandemic.

According to expert analysis, it has been estimated that recovery would not take longer than 2021.

This leads us to talk about the importance of the economic reactivation in Mexico, which has started gradually in different sectors, depending on whether they are considered essential activities or not.

And one of those essential activities is housing and construction.

And why has it been prioritized? This is because construction is considered essential because it affects 37 of 42 economic sectors in the country, that is, 88% of the economy, according to CANADEVI (National Chamber of the Industry of Development and Promotion of Housing).

Thanks to this, around 6,000 construction companies have already resumed their activities, creating more jobs.

Then, real estate companies that develop their own projects have the opportunity to resume construction - following the relevant sanitary protocols - and thus avoid delays in the delivery of houses and condos.

As you can see, the real estate market has remained fairly stable during the pandemic, and its reactivation is showing even better results than expected.

What should you consider when buying a property today?

After learning about the post-pandemic real estate market recovery, what should you consider when buying a property today?

Actually, many of the aspects are not very different from those that should be considered in a normal situation.

 Coins stacked next to a wooden house.
The advantage is that the real estate sector is still a fairly safe option for investment.

There are only a few things you should emphasize, as they have become more relevant due to the pandemic.

1. Choose the right city to invest

One of the most important decisions is to choose well the city in which you will invest, whether you want the property to live in, to rent out, or as a vacation home.

You have to make sure that the city has all the necessary services; security, pleasant climate, entertainment places, good schools, supermarkets and restaurants with home service, clean transportation, and -of course- a good health system.

The latter is very important in these times, because living in a city with good hospitals and doctors gives you security during the pandemic.

Similarly, delivery services have become very important this year, as they help maintain hygiene protocols and social distance without sacrificing your shopping.

Which are the best cities to invest in?

Merida is one of the best cities to invest in, as it remains the safest city in Mexico and the second safest in the Americas; a title awarded by CEO World magazine.

This city has everything from the best hospitals, schools, universities, entertainment centers, museums, delicious cuisine, and a strong orientation towards art, history and culture.

Merida is a perfect choice for people who want a quieter environment, different from places like Mexico City.

The Riviera Maya is another option for investment, and was considered the top tourist destination during the World Travel and Tourism Council's (WTTC) #TogetherInTravel campaign.

Among the cities with the best real estate developments are:

  • Playa del Carmen, a city that combines beach life with the exclusivity and amenities of the 5th Avenue establishments.
  • Tulum, a quite comfortable place, where you can connect with the surrounding nature, discover Mayan ruins and incredible natural attractions.

The great advantage of these places not only lies in their beauty, but in the fact that they are perfect for buying real estate and then renting it out, thanks to the high flow of tourists.

Banner of real estate developments in the Riviera Maya.

2. The amenities

Regardless of what you are going to use it for, it is always a good idea to choose a property with many amenities,

However, the COVID-19 pandemic has made this more relevant because people are spending more time at home.

Whether they are doing home office work every day or still going to work, it is true that the number of trips out of the house has decreased to comply with health and safety protocols.

So having amenities has become a necessity, and these are some of the most popular:

  • Gym: Equipped with treadmills, exercise bikes, dumbbells, different types of machines and stretching areas.
  • Courts: Of different types, to play volleyball, tennis, paddle, basketball, soccer, among others.
  • Green areas: Gardens, benches, children's games and spaces for your pet to walk and play.
  • Terrace grill: To organize barbecue with the family, and small celebrations.
  • Event rooms: To celebrate birthdays, organize business meetings, or a small party, with all the sanitary protocols.

Many of these advantages are found in residential developments, and its importance is that you do not need to go out to enjoy them, and that all hygiene protocols are maintained and very few people are in contact with these areas.

3. High capital gain

The value of your property will depend on the location and the amenities you have access to.

Remembering what surplus value is: we have that it is the increase in value of a property, due to various internal and external factors.

These are some of the external factors that can influence capital gains:

  • The growth of the city.
  • Access to services of all kinds.
  • Its main economic activity in the city and if it is a tourist destination.
  • The proximity to supermarkets, hospitals, schools.
  • The investment of small, medium and large companies.
  • The level of security of the city.
  • The quality of life in the area.
Banner of real estate developments in Merida.

The following are some of the internal factors that influence capital gains:

  • Building materials.
  • The location, and whether it is in a private residential complex.
  • The amenities it has.
  • The electrical, water, and internet facilities.
  • The size of the property, the number of rooms and their uses.
  • Whether it has private security or not.

In this way, if the property complies with several of these factors then its value will be much higher, and therefore you will be able to obtain a better return.

Investing in real estate is always the best option

The projection for the real estate market after COVID-19 is quite good, as it is a fundamental part of Mexico's economy.

Whether you want to purchase a property to increase your investment portfolio, plan to rent it out, or simply want a new home, you don't have to worry about the real estate market being affected by the pandemic.

In conclusion: real estate continues to be the best way to secure your future, you get the home of your dreams and you make a profit.

If you want to learn more about real estate investment, we suggest you read about where to invest your money and how to choose a real estate agency, so that you are prepared for any situation.

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